Annuity Payout Calculator: Monthly Income From a Lump Sum
An annuity payout calculator estimates how much a lump sum can pay each month, quarter or year over a fixed number of years at an interest rate you assume, or how large a lump sum you need for a payment you want. Example: $100,000.00 at an assumed 5% a year, paid monthly for 20 years, gives payment = P x r / (1 - (1 + r)^-n) with r = 0.05 / 12 and n = 240, which is about $659.96 a month. The 5% is your assumption, not a guarantee, and a life annuity from an insurance company is priced differently.
Maintained by Archie Chang · Formulas checked November 8, 2026 · Methodology & sources
Estimates only. This is a fixed-period (period-certain) payout. It does not model taxes, fees, inflation, or a payment for life, and it does not use the terms of any insurance company product.
Your details
Estimated payout
Estimated first payment each month
$659.96
An estimate from the rate you assumed, not a guarantee or a quote.
- Last payment
- $659.96
- Total of 240 payments
- $158,389.38
- Interest part of that
- $58,389.38
Year by year
| Year | Payment each month | Paid in the year | Balance left |
|---|---|---|---|
| 1 | $659.96 | $7,919.52 | $97,012.69 |
| 2 | $659.96 | $7,919.52 | $93,872.54 |
| 3 | $659.96 | $7,919.52 | $90,571.74 |
| 4 | $659.96 | $7,919.52 | $87,102.06 |
| 5 | $659.96 | $7,919.52 | $83,454.86 |
| 6 | $659.96 | $7,919.52 | $79,621.07 |
| 7 | $659.96 | $7,919.52 | $75,591.14 |
| 8 | $659.96 | $7,919.52 | $71,355.02 |
| 9 | $659.96 | $7,919.52 | $66,902.18 |
| 10 | $659.96 | $7,919.52 | $62,221.52 |
| 11 | $659.96 | $7,919.52 | $57,301.39 |
| 12 | $659.96 | $7,919.52 | $52,129.53 |
| 13 | $659.96 | $7,919.52 | $46,693.08 |
| 14 | $659.96 | $7,919.52 | $40,978.48 |
| 15 | $659.96 | $7,919.52 | $34,971.52 |
| 16 | $659.96 | $7,919.52 | $28,657.23 |
| 17 | $659.96 | $7,919.52 | $22,019.89 |
| 18 | $659.96 | $7,919.52 | $15,042.96 |
| 19 | $659.96 | $7,919.52 | $7,709.09 |
| 20 | $659.96 | $7,919.52 | $0.00 |
How this annuity payout calculator works
- The rate you enter is a nominal yearly rate. It is divided by the number of payments in a year (12, 4 or 1) to get the rate for one period, r, and it compounds at the same frequency as the payments. For example, 5% compounded monthly is an effective yearly rate of about 5.12%. The number of payments, n, is the years times that. The site’s retirement withdrawal calculator converts a yearly return to an effective monthly rate instead, so the same input gives slightly different results there.
- The lump sum earns r each period, and each payment comes out of it. The payout is set so the balance reaches zero after the last payment.
- Level payment at the end of each period: P x r / (1 - (1 + r)^-n). At the start of each period, divide that by (1 + r).
- With a yearly increase, g, the payment steps up once a year, in the manner of a cost-of-living adjustment. The first payment is lowered so the whole stream still adds up to the lump sum in today’s money.
- At a 0% rate the payment is the lump sum divided by n, and with an increase at 0% the payments simply rise each year until they total the lump sum.
- The needed-lump-sum mode runs the same formula backward: it adds up the present value of every payment you want.
Check by hand: $100,000.00 at 5% a year, monthly for 20 years, gives about $659.96 a month paid at the end of each month, or about $657.22 paid at the start. Over 240 payments that totals about $158,390.40, so the interest part is about $58,390.40.
Starting amount needed for the payment you want
Switch the calculator to the second option to find the amount. For a first payment of $2,000.00 a month for 25 years at an assumed5%, you need about $342,120.09, which is the sum of each payment discounted back at the monthly rate. At a 0% rate you would need only the payments added up, $600,000.00. The gap between the two, $257,879.91, is what the assumed interest covers.
With a yearly increase the amount needed is higher, because later payments are larger. A smaller first payment is how a rising stream fits the same starting amount: for example, on $100,000.00 at the same assumed rate, $659.96 level a month becomes $561.21 in the first year and $817.58 in the last year with a 2% yearly increase.
What a fixed-period payout does not cover
This payout stops when the years you choose are up, whether or not you are still living. A life annuity pays for a lifetime and is priced from mortality tables, the insurer’s own terms and any fees, so it cannot be worked out from a rate and a number of years alone, and this calculator does not try. The interest rate and the yearly increase are your assumptions, and a contract can set them differently. Tax is not estimated.
To work out what a lump sum grows to before you draw on it, use the annuity calculator.
Annuity payout calculator FAQ
How is an annuity payout calculated?
The payout is the lump sum spread over a fixed number of payments while the money left earns the interest rate you assume. The formula is payment = P x r / (1 - (1 + r)^-n). For $100,000 at an assumed 5% paid monthly for 20 years, r = 0.05 / 12 and n = 240, which gives about $659.96 a month.
What does period certain mean here?
The payout runs for the number of years you choose and then stops, with the balance reaching zero at the end. It does not depend on how long anyone lives. A life annuity pays for a lifetime, is priced from mortality tables and the insurer’s terms, and is not covered by this calculator.
How do I find the amount I need for a monthly payment I want?
Use the reverse mode: enter the monthly payment, the years and the assumed rate. It returns the starting amount that funds that payment, which is P = payment x (1 - (1 + r)^-n) / r. For $2,000 a month over 25 years at an assumed 5%, the amount needed is about $342,120.
How does a yearly increase change the payout?
A yearly increase raises the payment once a year, like a cost-of-living adjustment, so the first payment starts lower. At an assumed 5% over 20 years on $100,000, a level payment is $659.96 a month, while a 2% yearly increase starts at $561.21 and ends at $817.58 a month. The increase is your assumption, not a promise from any contract.
Is the payout taxed?
This calculator does not estimate tax. How a payout is taxed depends on the kind of account or contract it comes from and on your situation, so the figures are before any tax.
Why might my real payout be different?
The interest rate you assume may differ from what a contract credits, and real products add terms such as fees, payment schedules and a pay period based on life expectancy. The result is an estimate from your inputs, not an offer or a quote.
Related pages
Saving toward a lump sum first? Use the annuity calculator or the 401k calculator. To plan withdrawals from savings, see the retirement withdrawal calculator, and for what a withdrawal can cost in tax, the 401(k) withdrawal tax calculator. Federal employees can estimate their pension with the FERS retirement calculator, and service members with the military retirement pay calculator; those follow government formulas, not the rate-based math on this page.